Legislature(2009 - 2010)SENATE FINANCE 532
02/03/2009 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB90 | |
| SR4 | |
| SB88 | |
| SJR5 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SR 4 | TELECONFERENCED | |
| *+ | SB 88 | TELECONFERENCED | |
| *+ | SJR 5 | TELECONFERENCED | |
| *+ | SB 89 | TELECONFERENCED | |
| *+ | SB 90 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 3, 2009
9:02 a.m.
9:02:21 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Kim Elton
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Senator Gene Therriault; Jay Livey, Staff, Senator Hoffman,
Sponsor; Kathie Wasserman, Executive Director, Alaska
Municipal League; Meera Kohler, President CEO, Alaska
Village Electric Cooperative; Mike Harper, Deputy Director,
Rural Energy Group, Alaska Energy Authority; Linda
MacMillan, Accountant, Alaska Energy Authority; Karen
Sawyer, Staff, Senator Charlie Huggins; Kathie Wasserman,
Executive Director, Alaska Municipal League.
PRESENT VIA TELECONFERENCE
Denise Michels, Mayor, City of Nome and President, Alaska
Municipal League; Richard Gazaway, Hearing Examiner,
Regulatory Commission of Alaska; Shirley Perkins, Business
Owner, Elfin Cove; Michael Hoffman, Association of Village
Council Presidents; Myron P. Naneng Sr., President,
Association of Village Council Presidents; Tom Lakosh,
Anchorage; Paul D. Kendall, Anchorage.
SUMMARY
SB88 "An Act repealing certain provisions relating to
modifying the factors that apply to calculate the
amount of power cost equalization; providing for
an effective date by repealing the effective date
of sec. 3, ch. 2, 4SSLA 2008; and providing for an
effective date."
SB 88 was HEARD and HELD in Committee for further
consideration.
SB89 "An Act relating to retirement benefits for
members of the Alaska Territorial Guard; and
providing for an effective date."
SB 89 was POSTPONED.
SB90 "An Act making a special appropriation to the
Department of Military and Veterans' Affairs to
provide retirement benefits to members of the
Alaska Territorial Guard; and providing for an
effective date."
SB 90 was POSTPONED.
SR4 Relating to the federal stimulus package.
CSSR 4(FIN) was REPORTED OUT of Committee with a
"do pass" recommendation and with new fiscal note
by the Senate Finance Committee for all
departments.
SJR5 Urging the United States Department of Defense to
pay veterans benefits retroactively and to
continue to provide retirement benefits for
members of the Alaska Territorial Guard who served
during World War II.
CSSJR 5(FIN) was REPORTED out of Committee with a
"do pass" recommendation and with new zero fiscal
note by the Senate Finance Committee for all
departments.
9:02:39 AM
Co-Chair Stedman read the agenda and reviewed previous
actions. He explained that SR 4 was similar to SR 3; a new
resolution was required to correct a drafting error in SR 3.
SENATE RESOLUTION NO. 4
Relating to the federal stimulus package.
Co-Chair Hoffman MOVED to ADOPT Work Draft 26-LS0480\E,
Bannister, 2/2/09. There being NO OBJECTION, it was so
ordered.
9:05:54 AM
Co-Chair Stedman noted there were three changes in the CS:
the Senate Finance Committee is now the prime sponsor, outer
continental shelf language was added on page 2, starting on
line 7, and a list of recipients to receive copies has been
added. There is a zero fiscal note. He stated that public
testimony had already been taken for SR 3.
9:06:49 AM AT EASE
9:07:29 AM RECONVENED
Co-Chair Hoffman explained changed language on page 2. The
primary reason for the resolution is to make the wishes of
the state known, particularly to make sure the stimulus
package reached all regions of the state.
Co-Chair Hoffman stated that if the House takes action,
there could possibly be a joint resolution, which would
carry more weight, but he thought the Senate should move
forward.
Co-Chair Stedman agreed that if the House sends a
resolution, the Senate would take swift action towards a
joint resolution.
9:09:04 AM
Senator Huggins explained that the outer continental shelf
provision on page 2, line 5 would give the state 37.5
percent of oil revenue. The provision would put Alaska in
equity with the gulf producing states established in the
2006 Energy Security Act.
Senator Olson commented wondered if the outer continental
shelf provision was worded strongly enough. He thought the
section was the most significant portion of the resolution.
Co-Chair Stedman stated that if the adjustment is made, it
would have far reaching impact on the state.
Co-Chair Hoffman MOVED to report CSSR 4(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSR 4(FIN) was REPORTED OUT of Committee with a "do pass"
recommendation and with new fiscal note by the Senate
Finance Committee for all departments.
SENATE BILL NO. 88
"An Act repealing certain provisions relating to
modifying the factors that apply to calculate the
amount of power cost equalization; providing for an
effective date by repealing the effective date of sec.
3, ch. 2, 4SSLA 2008; and providing for an effective
date."
9:12:04 AM
JAY LIVEY, STAFF, SENATOR LYMAN HOFFMAN, SPONSOR, explained
that the bill is part of the energy package dealing with
electricity. The bill would make electricity affordable in
rural areas through making permanent changes to previous
legislation. During the July special session, the ceiling on
Power Cost Equalization (PCE) was raised from 52.5 cents to
$1.00. The change was for one year through June 30, 2009.
The bill would make the change to $1.00 permanent.
Mr. Livey pointed out that PCE makes energy affordable in
rural Alaska by subsidizing 500 kilowatt-hours (kWh) per
month of power for families. Power Cost Equalization is
calculated on the difference between two ranges. The upper
range is $1.00. The bottom range is the average of costs in
Fairbanks, Anchorage and Juneau, and hovered around 12.2 and
12.8 cents for the past few years. Power between that range
is currently subsidized. He gave examples that amounted to a
difference of paying $60 instead of $140.
9:15:59 AM
Mr. Livey added that the provision covers only the first 500
kWh of power, which is only enough for very basic
electricity. The bill makes sure people can afford basic
electricity.
9:17:41 AM
Mr. Livey reviewed sections of the bill. The first section
repeals the previous provision, so that the upper PCE
ceiling does not revert back to 52.5 cents. Section 2 makes
SB 88 retroactive to June 30. Section 3 repeats a section of
the law that would have made the previous section effective
June 30. Section 4 makes the bill effective immediately.
9:18:17 AM
Co-Chair Hoffman added that when the previous legislation
passed the Senate, there was a broader piece of legislation
including communities using hydropower above the 12.5 cents
or that may have otherwise been excluded. Those communities
included Kodiak and Fairbanks. He asked the committee to
consider adopting a similar provision through the amendment
process.
9:19:57 AM
Senator Thomas agreed and referred to the broader bill. He
stated that the price of oil has negatively impacted the
Interior.
Co-Chair Stedman referred to the fiscal note by the
Department of Commerce reflecting the $5.5 million
appropriation need to capitalize the fund.
9:21:21 AM
Co-Chair Stedman OPENED PUBLIC TESTIMONY.
DENISE MICHELS, MAYOR, CITY OF NOME and PRESIDENT, ALASKA
MUNICIPAL LEAGUE (testified via teleconference), spoke in
support of the legislation.
9:22:16 AM
Senator Olson queried the cost of a kWh in Nome. Ms. Michels
answered 36 cents. Senator Olson asked if that includes wind
power put into the grid. Ms. Michels answered no, as it is
just getting going.
9:22:47 AM
RICHARD GAZAWAY, HEARING EXAMINER, REGULATORY COMMISSION OF
ALASKA (testified via teleconference), informed the
committee that he was available for questions.
SHIRLEY PERKINS, BUSINESS OWNER, ELFIN COVE (testified via
teleconference), suggested amending SB 88 so that it would
include small businesses. She owns a small business with
electric costs of nearly $2,000 each month in the
summertime, even with working to conserve. Diesel fuel cost
$5.70 per gallon in Elfin Cove. Electricity is generated for
60 cents per kWh. The community has applied for funding for
hydroelectricity, but it takes time. Currently PCE covers
the first 500 kWh in the home; previously it covered the
first 750 kWh. She wanted funding back to the higher level.
9:24:58 AM
KATHIE WASSERMAN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE (AML), testified in support of SB 88. She reported
that AML had just finished its legislative conference; their
top two priorities are energy and transportation. The league
intended to work closely with the legislature on PCE.
Senator Olson asked if AML had statistics about the effect
of energy costs on small businesses. Ms. Wasserman said she
would get numbers. She added that when businesses close in a
small community, everyone is affected.
9:27:51 AM
MEERA KOHLER, PRESIDENT AND CEO, ALASKA VILLAGE ELECTRIC
COOPERATIVE, testified in favor of SB 88. She explained that
the cooperative is a non-profit utility that serves 53
villages throughout the state. Alaska Village Electric
Cooperative (AVEC) represents the largest single consumer of
PCE because their combined villages represent about 45
percent of Alaska's village population.
Ms. Kohler thought it was critical to retain a higher
ceiling than the one in place since PCE. The 52 cent ceiling
has not changed since it was put in place in 1984. The
temporary ceiling will only have been in place for nine
months. The cooperative purchased their fuel last year at a
cost of $26 million, almost double the cost of the year
before.
Ms. Kohler explained that the Regulatory Commission of
Alaska set the rate October 1to coincide with new PCE
levels. The cooperative would be collecting on the higher
price through the end of September. The June 30 sunset would
cause hardship for AVEC communities, whose rates could
triple.
9:30:54 AM
MIKE HARPER, DEPUTY DIRECTOR, RURAL ENERGY GROUP, ALASKA
ENERGY AUTHORITY, testified in support of SB 88, although
they would prefer an extension of two to three years rather
than a permanent change because of oil price volatility.
Senator Elton queried the connection between the bill and
the price of oil. He viewed the bill as a relief bill for
communities that need it and thought the question was how
much relief would be provided.
9:33:38 AM
LINDA MACMILLAN, ACCOUNTANT, ALASKA ENERGY AUTHORITY,
explained that rates for communities on the road system have
been the highest in Southeast Alaska. She acknowledged that
there is no clear one-to-one relationship between the cost
of diesel and the cost of diesel in a particular community.
Senator Elton thought the issue of SB 88 was not the price
of a barrel of oil, but the legislature making a decision
about what is sustainable in a village economy. He asked the
relationship between the cost of oil and appropriate
assistant from the state.
9:36:04 AM
Mr. Harper gave examples of various prices of crude oil,
which affects the price of the rate for residents. Up until
three years ago, the price of diesel was steady. More
recently it has been up and down. He thought the extension
was a better course of action.
Senator Elton did not think it mattered where the cap was.
Mr. Harper replied that the floor of the formula is based on
what urban communities pay, ranging from 12.5 cents and 52.5
cents. No one knows what the cost of oil will be.
Co-Chair Stedman said there would be a future presentation
with more detail on how the formula would work. He asked
that the Alaska Energy Authority (AEA) include information
about how their endowment functions, as there are issues
about the endowment that need to be corrected.
Co-Chair Hoffman asked if either of the AEA testifiers lived
in a community benefiting from PCE. Ms. MacMillan replied
that she had lived in such a community in the past but no
longer did. Co-Chair Hoffman asked if they wanted long-term
assurance that power rates would be as low as possible. Mr.
Harper replied in the affirmative.
9:40:02 AM
Co-Chair Hoffman said that history has shown the price of
oil to be steady for a long period of time, though reports
say that the price of oil may go up above $100 per barrel.
There are communities paying as high as $1.17 per kWh. If
the measure were temporary, the legislature would have to
revisit the issue, which would create work and create
anxiety for communities dependent on PCE. He stressed that
the state has higher revenue when the price of oil goes up.
He thought the testimony of people living in the affected
communities would be different.
9:42:37 AM
Senator Olson suggested taking the position of a small
business person in a village who wants to expand but has no
stable power source. The increasing costs will result in a
migration out of the village. He thought the suggestion of
an extension was a conservative and short-sighted outlook.
Mr. Harper discussed historical changes in the program that
affected businesses. The program has grown to $35-40 million
for the PCE expenditure. He agreed the situation was
difficult for small business owners, and he wanted that
addressed. On the other hand, he had concerns about the high
price.
9:45:58 AM
Senator Olson suggested looking at the whole picture. The
cost of PCE may be higher, but the state is in a much better
position financially.
Co-Chair Stedman reiterated concerns about the AEA
endowment. If the agency still wants a one or two year
extension after reconsidering its position, he requested
that they come forward with a suggestion for a long-term
solution. He stated the committee wanted multi-generational
solutions to energy challenges.
9:47:51 AM
MICHAEL HOFFMAN, ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS
(AVCP), BETHEL (testified via teleconference), testified on
behalf of his own company, Kuskokwim Wilderness Adventures.
Customers are canceling due to high prices because of fuel
costs. This affects the whole community of Bethel.
MYRON P. NANENG SR., PRESIDENT, ASSOCIATION OF VILLAGE
COUNCIL PRESIDENTS (testified via teleconference), testified
in support of the legislation. He explained that AVCP is a
regional non-profit tribal corporation representing 56
tribal governments on the Yukon-Kuskokwim Delta.
9:51:07 AM
Mr. Naneng Sr. testified that the tribal leaders in the
villages were nervous about the coming winter because they
were forced to pay the highest fuel costs on record. The
villages off road have to import fuel by barge or air in
emergencies and have to sign no-fault contracts with vendors
if deliveries are delayed. Some of the villages are unable
to make fuel orders in concordance with state programs such
as the bulk fuel loan in time to get lower rates.
Mr. Naneng Sr. explained the extremely high cost of living.
For example, the people of the Wade Hampton district pay
$0.62 per kWh for electricity, $7.68 per gallon for heating
fuel, and as much as $11 for heating fuel that had to be
flown in. Energy costs are up to 60 percent or more of
household costs for many rural Alaskans whose average
incomes are $30,184. People have to do without electricity
and heat. These costs combined with severe cold make life
unsustainable and a threat to general health.
Mr. Naneng described the remoteness of villages in his
region from transportation hubs and commercial centers.
There are tremendous logistical problems in addition to high
costs for transporting fuel. Diesel fuel is often the only
and best solution for fuel. Diesel-electric power plants
provide an efficient and effective energy solution in many
cases and PCE provides a buffer against high electric costs.
Mr. Naneng stated that he had to pay $600 for electricity
during the month of December. He referred to concerns in the
legislature that SB 88 would create an unending entitlement
program and described the unusual conditions that brought
about the energy crisis: the high price of oil and
catastrophic conditions for the commercial fisheries on the
Kuskokwim and Yukon rivers. Because of the poor fishing
season, the cash usually generated by the commercial
fisheries is not there for energy or provisions for hunting
and fishing to gather food.
Mr. Naneng pointed out that rural Alaska faces the highest
energy and food costs in the nation, as Governor Palin told
the U.S. Army when they proposed to reduce payments to
Native Elders who had served in the Territorial Guard. Using
the emergency funds will protect people. He compared energy
and food prices in Anchorage to prices in remote rural
villages.
Mr. Naneng told the committee that AVCP had provided low-
income energy assistance to 1,846 households. The council
supports a permanent fix to PCE regardless of how high the
cost of oil rises.
9:58:33 AM
TOM LAKOSH, ANCHORAGE (testified via teleconference),
testified in support of the legislation. He thought the
power management system in Alaska needed to be revamped to
be more equitable and provide a long-term, sustainable
solution to the generation of power in rural communities. He
thought the PCE should be based on individual need for
subsidy rather than community needs. He did not want the
state to subsidize communities without energy conservation.
He suggested an amendment calling for a full-scale re-
assessment of energy needs and more cost-effective solutions
to energy production and consumption, such as a state-wide
building code, particularly where energy is being wasted.
10:02:22 AM
PAUL D. KENDALL, SELF, ANCHORAGE (testified via
teleconference), expressed concern about PCE. He opined that
PCE should no longer exist. He described problems in the
state, all with energy in common. Electricity and water are
basic needs. He thought energy should be a priority. He
listed different forms of harnessing energy.
10:05:51 AM
SB 88 was HEARD and HELD in committee for further
consideration.
10:07:42 AM AT EASE
10:11:58 AM RECONVENED
SENATE JOINT RESOLUTION NO. 5
Urging the United States Department of Defense to pay
veterans benefits retroactively and to continue to
provide retirement benefits for members of the Alaska
Territorial Guard who served during World War II.
Senator Huggins MOVED to ADOPT Work Draft 26-LS0468\R,
Bailey, 2/2/09. There being NO OBJECTION, it was so ordered.
10:13:02 AM
KAREN SAWYER, STAFF, SENATOR CHARLIE HUGGINS, explained
CSSJR 5 as a resolution urging the Department of Defense to
continue to provide retirement benefits for members of the
Alaska Territorial Guard who served during World War II.
They were denied benefits in January due to a glitch in the
law. There was strong response, including from the Alaska
delegation, which resulted in the U.S. Army making a
decision to use emergency funds to extend the benefits two
months. The original language of the resolution has been
changed to take out the language about retroactivity; added
language supports the Alaska delegation to provide permanent
recognition of the members. In addition, the resolution
requests that the Department of Defense continue to use
funds to provide benefits until Congress passes the bills or
the army reverses their January decision.
10:15:25 AM
Senator Huggins MOVED to ADOPT Amendment #1:
Page 2, line 16, following "S. 342"
Insert: "and H.R. 744"
Co-Chair Stedman OBJECTED for discussion.
Senator Huggins explained the technical amendment changing
language.
Co-Chair Stedman removed his OBJECTION. There being NO
further OBJECTION, it was so ordered.
10:16:17 AM
Senator Huggins MOVED to ADOPT Amendment #2:
Page 1, Line 12, Insert:
WHEREAS, in 2000, because of the efforts of
Alaska's U.S. Senator, Ted Stevens, the United States
Congress passed legislation that required that service
as a member of the Alaska Territorial Guard during
World War II of an individual who was honorably
discharged be considered active duty for purposes of
all laws administered by the United States Secretary of
Defense; and
Co-Chair Stedman OBJECTED for discussion.
Senator Huggins explained that the amendment clarifies the
chronology of the process. He read the amendment.
Co-Chair Stedman removed his OBJECTION. There being NO
further OBJECTION, it was so ordered.
10:17:51 AM
Senator Elton suggested a language change from "their" to
"its" on page 2, lines 14 and 15.
Co-Chair Stedman referred to the zero fiscal note.
Co-Chair Stedman opened public testimony.
KATHIE WASSERMAN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE, testified in support of the legislation. She
reported that the league had addressed the issue and put
forth a resolution to take to the National Association of
Counties. Most members felt the change was an appalling
message sent from the army to the men who had served.
10:19:14 AM
SENATOR GENE THERRIAULT, testified that he supported
Amendment 2 to the resolution. He spoke to other language he
supported. He thought it was important for the legislation
to go forward because the fact that Congress has taken
action to fund another two months has misled Alaskans to
believe the issue was resolved. The long term solution has
yet to be achieved, and it was important and appropriate for
the government of Alaska to make a statement through the
passage of the resolution.
10:21:20 AM
Co-Chair Hoffman MOVED to report CSSJR 5(FIN) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSJR 5(FIN) was REPORTED out of Committee with a "do pass"
recommendation and with new zero fiscal note by the Senate
Finance Committee for all departments.
10:21:55 AM
ADJOURNMENT
The meeting was adjourned at 10:22 AM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Amendment 1.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Alaska Federal Economic Stimulus Update 1 15 2009.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| E-mail from R&J Hills re ATG.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Dir.Vet.Affairs e-mail re ATG.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| ATG -Wikipedia article.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| ATG Emergency Pay ltr from delegates 1-28-09.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Andrew Brown Sr e-mail re ATG.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Andrew Brown Sr e-mail re ATG member Paul Kiuyna Sr.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| CS for SJR005A work draft version R.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| CS SR4 Version E.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| CSG-Stimulus-SCHIP-Letter.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| CCED PCE Overview .pdf |
SFIN 2/3/2009 9:00:00 AM |
SB 88 |
| Estimated Allowances.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| Gov Palin's ltr to President re ATG.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Gov Press Release Economic Stimulus 1-12-09.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| Legal memo 012809.pdf |
SFIN 2/3/2009 9:00:00 AM |
SB 88 |
| GVEA residential rates.doc |
SFIN 2/3/2009 9:00:00 AM |
SB 88 |
| MAP SHOWING LOCATION OF ATG MEMBERS.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Letter to Delegation 1 7 09.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| Naneng Testimony.pdf |
SFIN 2/3/2009 9:00:00 AM |
SB 88 |
| Sen. Murkowski 012909.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| SJR5 Sen. Murkowski's floor speech re ATG.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| SJR 5 ATG SPONSOR STMT.pdf |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| SJR5.xls |
SFIN 2/3/2009 9:00:00 AM |
SJR 5 |
| Sponsor Statement SB 88.doc |
SFIN 2/3/2009 9:00:00 AM |
SB 88 |
| SR4.xls |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| US House Approps 01-21-09.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |
| US Senate Approps 01-23-09.pdf |
SFIN 2/3/2009 9:00:00 AM |
SR 4 |